Community Healthcare Trust(US:CHCT)2025-04-30 15:02Financial Data and Key Metrics Changes - Total revenue increased from $29.3 million in Q1 2024 to $30.1 million in Q1 2025, representing a 2.5% year-over-year growth [12] - Quarter-over-quarter, total revenue grew by 2.7% from $29.3 million in Q4 2024 to $30.1 million in Q1 2025 [13] - Funds from operations (FFO) decreased slightly by $77,000 quarter-over-quarter, remaining at $12.7 million in Q1 2025 [14] - Adjusted funds from operations (AFFO) totaled $14.7 million in Q1 2025, approximately $100,000 higher than Q4 2024, with a per diluted common share basis remaining at $0.55 [14] Business Line Data and Key Metrics Changes - Occupancy and weighted average remaining lease term remained flat at 90.9% and 6.7 years, respectively [6] - The company acquired a behavioral residential treatment facility for approximately $9.7 million, with anticipated tenant improvements of $1.4 million [7] - The company signed definitive purchase and sale agreements for seven properties with an expected investment of $169.5 million, with expected returns ranging from 9.1% to 9.75% [8] Market Data and Key Metrics Changes - The company sold a building in Ohio for approximately $400,000, receiving net proceeds of approximately $600,000 [9] - The geriatric psychiatric hospital operator, a tenant in six properties, represents an annual base rent of $3.2 million, with incremental operating improvements noted [9] Company Strategy and Development Direction - The company continues to be selective in acquisitions and is evaluating capital recycling opportunities to fund near-term acquisitions [10][22] - The company aims to maintain modest leverage levels while exploring various capital options, including potential asset sales and draws on the revolver [10][22] - The company has a solid pipeline of acquisitions expected to close over the next three years, totaling approximately $169 million [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of tenants and the overall health care sector, indicating no immediate negative impacts from macroeconomic factors [44] - The company is actively monitoring the geriatric psychiatric hospital operator's sale process and expects more clarity by the end of Q2 or early Q3 [19][40] - Management remains cautious about raising equity at current share prices and is focused on selected capital recycling [22][25] Other Important Information - The company declared a dividend of $0.47 per common share for Q1 2025, marking a continuous increase since its IPO [10] - The company is not currently issuing shares under its ATM program due to low share prices [10] Q&A Session Summary Question: Update on the geriatric psychiatric hospital operator's sale process - Management indicated that the operator is in an active sale process with potential buyers, and more clarity is expected by the end of Q2 or early Q3 [18][19] Question: Acquisition outlook and capital allocation - Management confirmed a healthy pipeline of acquisitions but noted a cautious approach to raising equity at current prices, focusing on selected asset sales and revolver draws [20][22] Question: Concerns about smaller tenants - Management reported stability among tenants and no significant issues arising in Q1, with a positive macro outlook for health care providers [44] Question: Conditions for the $169 million pipeline - Management clarified that the pipeline is solid and expected to close over three years, with flexibility in decision-making based on project evaluations [49] Question: Position of notes in the event of asset sales by the psychiatric operator - Management explained the company's second lien position on accounts receivable and first lien on other assets, indicating a structured approach to creditor relationships [51]